Training expenses

Dottie

Hi

Scenario: A limited company with one director/shareholder.

Wife does a training course (unrelated to original business activity, funded by herself) and then becomes a director/shareholder of the company and starts to work in her new field through the company.

My question is, are the training expenses incurred allowable? I think not:

http://www.hmrc.gov.uk/manuals/eimanual/EIM01235.htm

But would be grateful for any other input.

Why do some clients always tell you after the event?

Thanks

Dottie

jamesm96

Yeah I'd agree with you that it's probably not allowable, unless you could demonstrate that there was an 'offer of employment' and an 'agreement to reimburse after employment commences' per the exception in the manual? Doesn't seem likely though.

I think I'd also raise the question of 'wholly, exclusively and necessarily'; if the training had nothing to do with the business' current activity and it was undertaken by someone who's not even an employee then how would you demonstrate that it was wholly, exclusively and necessarily incurred?

stefanboro

Thinking a bit more positively I would want to know:

1. What was the lead time between the wife finishing the training course and starting her position and
2. Can you confirm that part of the intention of bringing her into the company was to expand the trading activities of the company and how distant are these activities?

I agree that it's very unlikely to qualify but depending on your answers to the two questions I would argue that there is at least potential for scope.

Dottie

Thank you both for your input. Will be interesting to see what the client thinks!

Dottie